French fraud investigators raided Renault's offices last week as part of a new probe

Renault SA offices in France were searched by government fraud investigators as part of a probe into vehicle emissions, raising the specter of a Volkswagen-type scandal and sending the carmaker’s shares down as much as 23 per cent.

Agents from France’s Economy Ministry’s fraud office visited Renault’s headquarters, as well as offices in Guyancourt and Lardy near Paris last week. The French automaker is cooperating fully with the investigation, the company said in an e-mailed statement this week, without providing details on what may have been seized. French automaker PSA Peugeot Citroën said it wasn’t raided and no anomalies were found in its vehicles.

Automakers have been under increased scrutiny since September, when U.S. regulators said Volkswagen cheated for years to make its diesel cars appear cleaner than they are. The rigged engines were installed in 11 million vehicles worldwide, sparking lawsuits by the U.S. Department of Justice and state attorneys general as well as investigations in at least seven countries.

As part of the backlash, French authorities started a probe in September into whether Volkswagen deceived customers about the emissions levels of its diesel cars and promised to expand the investigation to cover all automakers. Separately, the country’s environmental regulator began randomly testing vehicles to check differences between lab results and real-world emissions.

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Four Renault models had been tested by the end of last month, part of the effort to screen as many as 100 vehicles — including 25 from Renault. Officials overseeing the effort have signaled that additional tests under way probably won’t “uncover the presence of a ‘defeat device’ in Renault’s vehicles. That’s good news for Renault,” the company said in its statement, seeking to quell concerns. Meanwhile, French authorities declined to comment on why Renault seems to have been singled out.

Renault dropped 9.2 per cent to 78.67 euros at 3:43 p.m. in Paris after falling as low as 67 euros and wiping out 5.8 billion euros (US$6.3 billion) in market value. Peugeot fell 3.4 per cent, while other European automakers declined as well. Fiat Chrysler Automobiles tumbled 6.9 per cent in Milan and Daimler AG slipped 3.4 per cent in Frankfurt.

“The share reaction is significant,” but whether the issue develops into a scandal “needs to be determined,” said Frank Schwope, a Hanover-based analyst at NordLB. “But one must say that Renault doesn’t have the same America problems that VW has. That’s the most expensive for Volkswagen.”

Unlike its larger German rival, Renault doesn’t sell cars in the U.S., where emissions standards are tougher. Volkswagen faces tens of billions of dollars in potential penalties in the U.S. Still, diesel engines are crucial for French automakers — at the time the Volkswagen scandal broke, the technology accounted for at least 60 per cent of their European sales.

The fraud office began an investigation in parallel with the French government’s random environmental testing, the company said. The facility in Lardy is Renault’s main site in France for engine development, said Florent Grimaldi, an official with the CGT union there. The raids were earlier reported by Agence France-Presse.

“For several months, work has been ongoing on emission tests at the Lardy site and the departments that were raided were those of certification and adjustment of engine control systems,” Grimaldi said. “We have been asking for more resources for months at Lardy to work on pollution control.”